Pakistan State Oil Ltd. (PSO) is expected to report net profits of PKR2.9bn for 1QFY25 (EPS: PKR6.07), up 16% QoQ but down 87% YoY. Despite lower volumetric sales, PSO’s earnings are expected to improve on account of a decline in finance cost coupled with expected improvement in GMs due to lower inventory losses vs previous quarter.

Net revenues are expected at PKR851bn, down 6% QoQ, primarily led by a substantial 12% QoQ decline in volumes to 1.6mn MT. PSO’s HSD sales plunged 23% QoQ, whereas its MS volumes fell 9% QoQ—both declines were greater than those for the industry.

PSO’s share in MS and HSD fell by 7ppt and 10ppt, respectively, compared to last year. This was mainly due to stronger competition from GO following its acquisition by Saudi Aramco. However, GMs are expected to improve by 0.5ppt to 2.46% owing to lower inventory losses compared to the previous quarter (we estimate losses of PKR4.77/sh after tax for 1QFY25).